Study shows why 60 structured products lost investors money

American-style capital protection barriers largely to blame

David Brenchley
clock • 2 min read

The 60 structured products that have lost investors money in the past ten years overwhelmingly used an American-style capital protection barrier and were linked to alternative indices such as the European or emerging stockmarkets or commodities baskets, according to structuredproductreview.com data.

The website delved into the reasons investors saw negative returns on some structured products between 2010 and 2019, finding that some had been launched pre-financial crisis, meaning the losses stemmed from that event. Three others were as a result of a mid-term re-structuring by the provider to protect against potential counterparty default. However, the main linked reasons were due to the products using an American capital protection barrier, rather than a European one. An American barrier means if the linked index fell below a certain point during the investment period, and is neg...

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